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article imageOp-Ed: Investing alternatives to the stock market

By Paul Moyer     Sep 23, 2015 in Business
Investing in the stock market has been the most popular form of investing for the last 100 years. The question we have to ask is, "Is the stock market the best place to invest your money right now?"
With the Chinese economy slowing down and Europe having problems with Syrian refugees, the world economies are putting stress on the stock market here in the United States.
This stress has created a roller coaster ride of stock movement and caused many investors to start looking for other places to invest their money. While there is no shortage of options, these three investments give a great variety on risk and return for almost any investor.
Real Estate
The real estate market can offer high, medium, and low risk options and has the potential to produce very good returns. There are many options for investing in real estate, but three stick out for most people.
The first is buying a rental property and finding a renter. Rental property is an excellent way to earn an extra source of revenue. The risks of owning rental property is the cost of maintenance and the possibility of not being able to find a renter.
Another option is buying a property for a low cost and then renovating to sell at a higher price. “Flipping” properties can have huge return on investments, but requires working knowledge of renovation costs and doing your homework for how much houses can sell for in a particular area. If you go into flipping without a real plan you can get stuck with a house that will not sell.
If you aren’t comfortable with having a “hands-on” role in real estate investing, consider putting your money into a Real Estate Investment Trust (REIT). REITs are typically large groups that invest into real estate projects, commercial real estate or large land purchases.
Treasury Bills
Treasury bills come with three months, six months, or 1-year maturity rates. The return on investment for treasure bills is determined by the price they are purchased for vs. the face value of the treasure bills. At the end of the maturity process, the government will purchase the bill at face value.
Treasury bills are sold through a bidding process. If you are not comfortable bidding on the bills yourself, bills can be bought through an investment professional, commercial banks, or on-line investment brokers. The lower you buy the bond for, the more money you make at the end of the maturity process.
This technique offers a quick, safe, and simple way to invest your money. Because treasury bills are low risk, they are also a low reward form of investing. Many investing professionals believe that treasury bills are the best way to begin your investing portfolio as a hedge against the volatility in the market.
Peer to Peer Lending
Peer-to-peer (P2P) lending is exactly what it sounds like. One person (or group of people) invests in another person’s business, product, or idea. This is one of the most basic ways to invest money.
Peer-to-peer investing has seen a huge surge of popularity with investors recently. The Internet has made P2P investing one of the fastest growing techniques for investing.
Websites like Prosper and Lending Club are an excellent platform for anyone interesting in P2P lending. These are the two largest sites for connecting P2P borrowers and lenders.
Not only do these platforms connect P2P investors, but they provide all the necessary information to make a smart investment. The borrower will post the size of the loan and describe what they will use the money for. The platforms require the borrowers’ credit score, employment history, and any credit delinquencies to prevent scammers from stealing the lenders money.
Lenders can begin investing in P2P at almost any amount. Some lending propositions will allow investments as small as $25.
A unique feature of these P2P lending sites is the ability to invest money based on the risk of the venture. If you do not want to comb through each and every lending proposition, you can allow your money to be invested by a robot ran by an algorithm. The algorithm determines risk based on the information provided by the borrower, and you can set your desired level of risk you want to invest.
The returns on these loans can be very good. Jeff Rose, a certified financial planner in Illinois, did a comparison of Prosper and Lending Club, and was able to get 16 percent on his investment by putting together a portfolio of different loans. While this was over a short period it is very likely you can get around 8 percent interest if you do your homework and understand how invest with P2P lending.
Having a diversified investing portfolio is a corner stone to smart investing. It does not take a degree in business or finance to make smart investing decisions. As Warren Buffet stated, "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ."
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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